The stock market confirmed a bull trend last week after shaking off negative economic news and breaking above the neckline of what will now be a hindsight head and shoulders formation on a daily chart. The overnight rally in the S&P is another confirmation of this breakout. Outside of a small shot at a Monday market reversal the S&P is bullish through Wednesday until 2:15pm ET when the Fed announces the FOMC interest rate policy decision and reminds the market that there is significant global economic weakness that will hinder growth and global demand.

Energies

Crude oil is unlikely to move much higher, with a bearish Mound Ladle formation indicating a top between 79.18 and 81.44 (August contract). Therefore bear spreads are recommended. This week I will be issuing a bearish trade in the crude oil market. View my trade rec by subscribing to the Mound Trade Signals premium service at www.MoundTradeSignals.com. I recommend unloading the short crude oil versus long natural gas spread. Natural gas is likely to pullback here but the right strategy is a long strangle to play volatility expansion.

Financials

The stock market is in a bull breakout but the play is to sell into this move between 1145-1160 on the S&P. Bonds are likely to rally off the FOMC announcement on Wednesday as the Fed should not be anywhere near a rate hike. The dollar is choppy and developing a bearish pattern, capable of retracing significantly here to 83.50. The market thoroughly penetrated my 86 target and there is a likelihood we will see 90-91 before year's end, but in the near term there is enough downside risk that I recommend looking elsewhere for opportunity. The Japanese Yen remains a strong buy as plans to reduce corporate taxes and other incentives attracting foreign investment improve confidence in Japan. The Canadian dollar broke through critical resistance last week, albeit in weak fashion, and could be back to a bull market. I am pessimistic, but recommend waiting to go short until the market breaks below 9580. Until that happens it's a bull market.

Grains

I anticipate a grains rally the first half of this week until the Fed reignites global economy fears Wednesday afternoon, leading to a possible Thursday selloff across the board. Long strangles are recommended in soybeans and corn, with wheat remaining a value buy on dips with what I believe is the year's low already in. Rough rice is a technical sell with trend line resistance and just about every momentum indicator suggesting more downside is ahead. However the gut says there is a turning point upon us and if you are willing to jump in front of this selloff then I think the call side will pay dividends and recommend be contrarian to the technicals.

Meats

Hogs have reversed their bearish chart pattern and any close higher than Friday's high indicates a bull market reversal. I expect trending in this market to disappear and choppy congestion to develop. Cattle remains bearish.

Metals

Gold is worthy of a strong look this week. The market is setting up a short squeeze rally, one that could run up $100 in a blink of an eye, but this same squeeze will likely signal a top in this market and I recommend being prepared to buy straight long term gold puts if the market should spike to the 1300 area. Silver is showing signs of volatility expansion and long strangles are recommended. Copper remains bearish on declining global demand.

Softs

Coffee exploded with a short covering rally that is still very much in play. This market has nothing but record breaking crop forecasts and yet it is breaking out to multi-year highs. Get on this bandwagon as the upside potential remains extreme, but not without downside risk so look to use puts as protection on futures or bull spreads to play the upside move. It is still worth looking at a ratio call backspread to play a further breakout as congestion or a slow uptrend is unlikely. Cocoa remains a strong sell. Cotton is a buy on dips. OJ is a sell as the Brazilian crop is looking strong and declining global demand will help to pressure prices. Sugar is a buy with a target of 1900. Lumber is a strong cycle changing buy ahead of a 2011 economic turnaround.

James Mound is the head analyst for www.MoundReport.com, and author of the commodity book 7 Secrets. For a free email subscription to James Mound's Weekend Commodities Review and Trade of the Month, click here.